Elon Musk praised Micron, a manufacturer of AI memory chips. Should you buy its stock?

Elon Musk praised memory chip manufacturer Micron. “Micron has acted sensibly regarding future memory prices, while others have acted like extortionists, and current customers won’t forget that… Micron is making a smart move to secure long-term customer loyalty,” wrote the CEO of Tesla and SpaceX on social media platform X on the evening of October 13, New York time, after the market closed.

This was Musk's response to a post by Nicholas Mugalli, an analyst covering the technology, media, and telecommunications sector, who cited an optimistic note from JPMorgan on the memory market, according to Seeking Alpha.

The publication notes that no direct deals between Micron and Musk’s companies have been announced, but, according to its sources, the Colossus and Colossus 2 data centers near Memphis—operated by SpaceX subsidiary xAI—use Nvidia AI accelerators with memory from Micron. In addition, while discussing his Terafab chip manufacturing project, Musk mentioned Micron, South Korea’s Samsung Electronics, and Taiwan’s TSMC among his current suppliers.

Micron shares fell nearly 2% in premarket trading on October 14—in line with the broader market, which declined due to higher-than-expected inflation.

Musk's post came after a sell-off of chipmakers' stocks in the U.S.: On October 13, Micron's stock fell 3.6% by the close, and shares of another memory manufacturer, SanDisk, also declined.

Yahoo Finance attributes the plunge to increased competition from the Chinese chipmaker CXMT. Last weekend, the company reported progress in developing a new memory cell architecture and promised to release products based on it by the end of 2026. Cheap Chinese memory could find its way into data centers. These centers are the biggest buyers of such memory for AI, and investors’ bets on manufacturers’ stocks hinge on their demand, the portal notes.

Musk himself wrote on X on October 12 that when China masters the production of a particular product, its ability to scale up output is often greater than that of the rest of the world combined, as was the case with lithium-ion batteries and solar panels. The billionaire acknowledged that the situation with RAM might be different, but immediately pointed out that, as recently as about three years ago, it was a mass-market commodity with low margins. China appears to be quickly mastering standard memory chips produced to common specifications, but Musk believes it will face greater challenges with new HBM architectures.

According to analyst Nicholas Mugalli, whose post Musk responded to, concerns about semiconductors and AI appear to be overblown following the sell-off on October 13. He estimates that CXMT’s transition to the next generation of DRAM memory will have an impact on the market toward the end of the decade, rather than in the coming years. And without access to cutting-edge equipment from the Dutch company ASML, the Chinese company will produce chips at a significantly higher cost and with a higher defect rate, the analyst predicts.

According to data from Counterpoint Research cited by Seeking Alpha, prices for traditional DRAM, NAND flash memory, and high-bandwidth memory (HBM) rose by 80–90% in the first quarter of 2026.

Micron's management has indicated that the company's production capacity will be fully utilized and that prices for its products will continue to rise through 2028, according to Yahoo Finance.

JPMorgan Chase notes that Micron is entering into new long-term contracts at current high prices. There are already 26 such agreements, which will account for more than 35% of the company’s revenue through 2030. The order backlog under these contracts has reached $150 billion, of which customers have already committed to paying $32 billion. According to the bank’s estimates, even at the trough of the current cycle, Micron’s gross margin could remain higher than at previous peaks (around 62%).

According to FactSet, 52 analysts recommend buying Micron shares or advise increasing their weight in a portfolio to a level higher than that of the benchmark index (Overweight). Three experts recommend holding the stock, and only one has taken a “bearish” stance. Three months ago, however, there were no negative ratings. On average, analysts expect Micron’s stock to rise to $1,613, which is a 69% increase from the closing price on October 13.

This article was AI-translated and verified by a human editor